Texan Roulette

Increasing Wind Capacity Raises the Stakes in ERCOT

The ERCOT market is now more dependent on random weather than ever. While it was always the case with ERCOT’s real-time scarcity construct that hot weather was crucial to drive a high real-time peak demand and potential scarcity pricing, ERCOT now also has more wind capacity than any other U.S. grid, totaling 16.4 GW in August 2016 for a system with realized peak demand of 71.2 GW. ERCOT reports list nearly 5 GW of further wind supply with interconnection rights as early as next year.

While other grids have to grapple with wind variability for planning purposes, ERCOT is additionally at the mercy of wind conditions to generate adequate payouts for thermal units. With such ever-increasing dependence on highly variable random factors, ERCOT continues to look less and less like a predictable market for capacity and increasingly like a market open to surprise outcomes.